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Three answers to ‘Paying for College’ questions

February 25, 2022

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In a recent article, I explained how, by paying your college student to do a job for your business, you could save a lot of money.

For example, let’s say you paid your youngster $23,255 for a one-time job; one that wasn’t subject to self-employment taxes.

Using this strategy, you could deduct the $23,255 and your child would pay just $1,028 in 2021 taxes!

Sounds good, and it is good, but when you use this strategy three questions arise…

  1. Do I need to give my student a 1099? And which one—the NEC or the MISC? Also, which box do I check on the 1099?
  2. Since the $23,255 is not subject to the self-employment tax, how do I help my college-bound youngster avoid the kiddie tax (if he/she is still my dependent)?
  3. Would this one-time income allow an IRA to be opened? (Roth and/or traditional)

Please be aware that these are extremely important questions and you can benefit greatly if you know the answers.

Why? Because a huge deduction is involved, and if you get things wrong, you will lose out on a wonderful moneysaving opportunity.

Want to get things right?

It’s easy. All you have to do is…

CLICK HERE to get my complete article…

“Three Answers to
‘Paying for College’ Questions”

Filed Under: Children as employees, Education, Parents, Payroll, Retirement, Self-employment Tax, Tax Planning

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